Saudi Arabia: A Financial Powerhouse in the Making

Aramco

In a little under a year, Saudi Arab’s Public Investment Fund (PIF) has funneled about $50 billion of the Kingdom’s reserves into investments abroad, most of them in technology, fast tracking a country on its way to becoming a financial powerhouse.

Yasir Alumayyan, tapped by Deputy Crown Prince Mohammad bin Salman to build up the PIF in 2015, has more than doubled the number of employees of the fund in the past year to about 130. The expansion is in line with the plan for the PIF to take a large role in weaning Saudi Arabia off oil and building it up as a financial powerhouse – a main tenet of Vision 2030.

In addition to committing $45 billion to a new technology fund, the PIF will take over ownership of Aramco; it will also receive the proceeds from the initial public offering (IPO) of the oil company in 2018. The company plans to sell a 5 percent stake.

By 2020, the PIF plans to use half of the assets not tied up in Saudi Aramco to invest abroad – this is a substantial increase from the current 5 percent invested.

Until recently, Saudi Arabia kept a relatively low profile in investing overseas. That changed when earlier this year, Alrumayyan reached out to investment executives, successfully gaining the attention of some of the most prominent investors in the world.

 A Long Term Financial Powerhouse

Vision 2030 clearly and decisively lays out Saudi Arabia’s intentions for the PIF:

“The Public Investment Fund will not compete with the private sector, but instead help unlock strategic sectors requiring intensive capital inputs. This will contribute towards developing entirely new economic sectors and establishing durable national corporations. Building on the Kingdom’s leading position and historic alliances, we plan to enter long-term partnerships with neighboring and friendly countries for knowledge transfer and trade. Our Vision is to maximize our investment capabilities by participating in large international companies and emerging technologies from around the world.”

Read the full story on Bloomberg Businessweek.